Aqualisa Quartz - Simply A Better Shower (HBR Case Study)

Aqualisa QuartzSimply a Better Shower

The Flow!

• The U.K. Shower Market• Channels of Distribution• The Development of the Quartz Shower Valve• Initial Sales Results• Aqualisa Quartz and 4Ps of Marketing• Quartz Shower, Poor Sales: Reason• A Shift in Marketing Strategy? The Right Approach.

• Shower Market in late 1990s was plagued with problems:• While everyone had a bathtub,

only about 60% U.K. homes had Showers

• Archaic Plumbing• Plumbing was ‘gravity-fed’

• 2 Major Problems:• Poor/Low pressure• Fluctuations in pressure meant

fluctuations in temperature.

10%

15%

6%

25%

44%

U.K. Shower Sales, by reasons for Installation

Second Shower

New Build

Commercial

New Penetration

Replacement Shower

Introduction to the U.K. Shower Market

Electric Showers

• Sold under the brand name ‘Gainsborough’.

• Does not require hot water supply.

• Electrical components mounted in bulky box.

• Poor water flow.

Mixer Shower Valves

• 2 Types: Manual and Thermostatic

• ‘Aquavalve 609’ was the company’s core product.

• Blended both hot and cold water to set temperature.

• Additional booster pump required to enhance the flow rate.

• Installation requires excavation of bathroom.

Integral Power Showers

• ‘Aquastream Thermostatic’ was the primary product.

• Single compact unit that combined thermostatic mixer valve and booster pump.

• Results in a bulky box on the wall.

• Less reliable than Mixer Shower valves.


Channel Electric Showers Mixer Showers Power Showers

Do-it-yourself Sheds 550000 80000 20000

Showrooms 55000 70000 20000

Trade Shops 330000 400000 110000

Others (Electrical Wholesalers)

165000

Total units sold 1100000 550000 150000

U.K. Shower Market (By Product Type and Channel)


What Consumers disliked about their showers?

• Poor Pressure• Varying Temperature• Showers often Broke down• Stiff Valves & hard to turn Valves• Leaky Seals & Worn-out Showers


• Carried products across all available brands.• Primary Customer – Plumbers, who worked for developers, showrooms, contractors or directly for customers.• Aqualisa brand was available in 40% of the trade shops.• “The staff in these outlets don’t have the time to learn all the features and benefits of the 45,000 items they offer.”

Trade Shops

• High-end products.• Showroom “consultants” helped their customers through the process of ‘selecting’ and ‘designing’ a bathroom “solution”• A chance for consumer to view the product in a pleasant environment.• Showrooms preferred to carry high-end product lines and brands. They also offered installation services through subcontracting with contractors

and also through independent plumbers.• Aqualisa brand was sold in about 500 showrooms out of 2000 showrooms in U.K.

Showrooms

• Do-It-Yourself retail outlets like B&Q offered discounted, mass market, do-it-yourself products.• Electric showers led sales in this channel as they were cheaper and easier to retrofit.• Aqualisa brand was unavailable through this channel but its Gainsborough brand was available in 70% of the approx. 3000 DIY outlets in U.K.

DIY Sheds

Channels of Distribution

Plumbers• Master Plumbers in U.K. – 10,000• They had to undergo several years of training and 3 years of

apprenticeship to become master plumbers.• Consumers often had to wait for six months before a plumber

could take on a new job.• Installs 40 to 50 showers a year.• Charged about 40 to 80 euros per hour plus the cost of excavation

and materials.• Unfamiliar products could present unknown performance

problems and second visit is paid out of plumber’s pocket.• Loyal to single brand.• Plumbers distrusted innovation especially if it involves electronics.

Channels of Distribution

Development of the Quartz Shower Valve

• Shower market ranked Aqualisa number 2 in mixing valves and number 3 in the overall U.K. shower market.

• It had 25% net returns on sales and was enjoying 5% to 10% in mature market. • The current point of differences were eroding and they were loosing the market share.• They set up an R&D centre, which had top industrial designers and a bunch of

Cambridge scientists who applied technology to industrial application.• They realised that customer wanted a shower that looked great, delivered good

pressure at stable temperatures, was easy to use and didn’t break down.• Aqualisa designed Quartz shower with a maximum temperature of 45 degree Celsius so

that user can have the option to change the temperature to the desired value i.e. 41 degree and option to run at 2/3rd speed which they liked more than maximum pressure.

Initial Sales Results

• Sales team 90% -> maintaining existing accounts and 10% -> developing new customers.

• Conducted face-to-face interaction with plumbers to explain new product.

• Very few units had sold in first 4 months.• Plumbers were wary of innovation, particularly involving

electronics.• Quartz may eventually replace the core product.• Showrooms seemed niche market for the new product.

• Quartz was very superior to the electric showers being offered.• Provided efficient & reliable water pressure.• One touch control• Automatic temperature control.• Easy installation.• Flexibility to install processor remotely.

PRODUCT

• Trade Shops• Showrooms• Do-It-Yourself Sheds

PLACE

• Value• Standard• Premium

PRICE

• They contacted plumbers face to face to introduce the product• Print-advertisement campaign (Exhibit 9)

PROMOTION

Aqualisa Quartz and The 4Ps of Marketing

• The Quartz shower being a premium product was priced between 850 euros to 1080 euros, which was high as compared to other products of aqualisa.• The plumbers are usually wary of innovations and perhaps did not favor

the idea of installing an electronically devised showers. • The sales forces of aqualisa concentrated more on existing customers

rather than developing new ones.• The product was sold through trade shops which did not have time to learn

and explain the advantages of such a valuable product to end customers.• The Aqualisa product was sold in 500 showrooms out of 2000 showrooms

in U.K.

Quartz Shower, Poor Sales: Reason

Target Consumers Directly

Pros• Target consumers directly i.e. end-users and create a powerful consumer

brand.• This would enable them to compete with “Triton” the market leaderCons• Costly strategy for Aqualisa• It must be consistent to be effective.

Shift in Marketing Strategy?

Targeting Do-It-Yourself (DIY Sheds)

Pros• Gainsborough has already gained market share in DIY market so Aqualisa

Quartz can follow this.• Sales volume will be high.Cons• Once you show in a DIY sheds, you cant climb back out.• Potential cannibalization.


Targeting Developers

Pros• More number of plumbers get familiarized to this product.• Sales volume will be high.Cons• Developers may demand heavy discount which can dent the company’s

margin.• Significant time lag before the showers would reach consumers.


Thank You

Group 1